¶ Loans
- Loans are initially for 28 days. The interest is paid for this period in advance. The deposited collateral is held by the protocol when you take out a loan.
- Collateral valued at 150% of the loan (300% if SOV is collateral) is required.
- Interest for the initial duration is included in the amount borrowed.
- If the borrower repays the debt before the current end date, the borrower will get a refund of the pre-paid interest for all remaining days as well as all the deposited collateral minus the loan origination fee (0.09%).
- If the borrower doesn't repay the loan before the end date, the loan rolls over for a month at the same fixed APY.
When the value of the deposited collateral falls below 115% of the debt, a gradual liquidation of the collateral is initiated. The process liquidates the amount of collateral required to bring the collateral ratio back up to 120%. This process will repeat over and over if the price continues to move against the borrower. This gradual liquidation can result in the complete depletion of the borrower's deposited collateral.
This process:
- protects lenders by transferring the borrower's collateral to the lender a loan is unpaid.
- incentivizes borrowers to maintain sufficient collateral to cover their loans.
For information about repayment deadlines, go to the Finance → Borrow page and check the MY DEBTS→Payback until field.
¶ Borrowing Rate
The borrowing rate is determined by the utilization rate of the lending pool. The lending rate and borrowing rate vary as the utilization rate of the lending pool changes. The borrowing rate will increase gradually until the protocol reaches 75% pool utilization. When more than 75% of the pool is being utilized, the borrowing rate increases significantly to discourage borrowing.
The system is designed to reduce the borrowing rate when it is too high by increasing the interest rate. This encourages more people to lend to the pool in return for high interest, thereby reducing the utilization rate and the borrowing rate.
The borrowing rate displayed on the dapp is the minimum interest the next borrower will have to pay. It is a function of current utilization rate of the lending pool. Since not all borrowers pay the same interest, the average interest all borrowers have to pay is distributed uniformly to lenders through LP (liquidity pool) tokens based on the utilization rate of the pool. For example, if average interest rate all borrowers are paying is 10% and utilization rate of the lending pool is 50%, then each LP token will receive 5%.
¶ Example
When taking out a loan, the borrower must supply a 150% over-collateralized deposit (300% if SOV is used) to secure the original loan amount. The collateral is used to secure the loan from price fluctuations and to collateralize further interest payments if the loan is rolled over.
- If you repay before the current end date, the remaining balance of the interest will be refunded. The interest charged is then distributed to the lenders and protocol (90% to lenders, 10% protocol).
- If you do not repay before the current end date, all prepaid interest is distributed to the lenders and the protocol. The current loan is then extended for a month. However, your collateral ratio is now lower because you have paid the fees for the previous 28-day period and are prepaying interest for the new 28-day period.
- The value of your collateral must represent at least 115% of your debt. If the value of your collateral falls below 115% of your debt, then your collateral will undergo an incremental liquidation process.
¶ Reference
¶ Borrowing Guide
The following step-by-step guide will walk you through the process of borrowing on the Sovryn platform.
¶ 1. Access the Sovryn Alpha dapp
- Go to https://alpha.sovryn.app to access the dapp.
¶ 2. Connect your wallet
- On the right top, connect your wallet by clicking the Connect Wallet button.
If you have not already set up your wallet to connect with the Sovryn dapp, visit the Wallet Setup Guide section before proceeding further.
¶ 3. Select Finance → Borrow
- From the top navigation menu, select the Finance tab and continue with the Borrow option.
¶
Borrowing APY%
- The Borrow APY is the Loan Percentage Rate (interest) that you will pay for borrowing the selected asset.
- This is entirely a non-custodial arrangement with no prepayment penalties, so you are free to fully repay the borrowed asset at any time. Sovryn is a trusted platform for borrowing.
- The APY is variable according to the demand for borrowing on the Sovryn platform.
- Interest payments made by borrowers are distributed to lenders and SOV stakers.
¶
4. Select the asset to borrow
- Select the asset you would like to borrow using the left panel. Options are:
- RBTC
- XUSD
- DOC
- BPRO
Once you select the desired asset in the left panel, it will show a chart of APY for the most recent week.
¶
5. Enter the amount to borrow and select the source of collateral
- Enter the amount you want to borrow in the Amount to borrow field.
- Select the asset you currently hold that you want to use as collateral from the “Asset to collateralize and amount” drop-down.
- The dapp displays the amount needed for collateral. This amount updates based on market fluctuations. The dapp also displays the current collateral Account Balance under the collateral asset chosen.
- Double-check your selections and click the Borrow [name of the asset] button in the right bottom corner.
¶
6. Approve & Confirm your transaction
You will be prompted by your wallet to perform approval and confirmation.
- Confirm the borrowing process using your wallet.
Please be advised that the current transaction fees should be in the range of 0.065 GWEI, where the number of gas units used can vary in a range from 900K to 1.3M.- An example of a borrow transaction when BPRO is involved
Congratulations! You have successfully borrowed funds using the Sovryn platform.
- An example of a borrow transaction when BPRO is involved
¶ Debts & Repayment
After a successful borrow transaction is complete, you now have a newly created debt. Near the bottom of the Finance -> Borrow page, you will see the section called MY DEBTS. This section lists a summary of all your debts:
- Amount borrowed
- Collateral used
- Current APY
- Payback date
The debt summary can be toggled between Active and Repaid debts.
To repay a debt:
¶ 1. Select the debt you wish to repay
- On the Active tab, select the debt you would like to repay from the debt summary.
¶ 2. Click on the “REPAY” button
- The Repay Loan window will pop up.
¶
3. Enter the amount you wish to repay
- From the Repay Loan window, enter the amount you wish to repay.
¶
4. Approve & Confirm your transaction
After repaying from the previous step, you will be prompted by your wallet to perform approval and confirmation.
- Confirm the repayment transaction using your wallet.
Please be advised that the current transaction fees should be in the range of 0.065 GWEI, where the number of gas units used can vary in a range from 900K to 1.3M. Use the official RKS Gas Station tool to estimate the gas fee adjustment.- An example of a repayment transaction when BPRO is involved
Congratulations! You have successfully repaid borrowed funds on the Sovryn platform.
- An example of a repayment transaction when BPRO is involved
NOTE: You can find your loan history for closed-out loans by clicking the History tab in the MY DEBTS section.
¶ Add collateral
Once you have a loan established, you have the option to add collateral. You may choose to add collateral if the collateral has dropped close to 115% to avoid liquidation.
To add collateral:
¶ 1. Go to MY DEBTS at the bottom of the Borrow page.
On the Active tab, find the loan you want to add collateral to, and click the Add Collateral button.
¶ 2. Specify the additional collateral
Fill in the form to specify the amount of collateral you want to add, and click Continue.
¶ 3. Approve & Confirm your transaction
After adding collateral from the previous step, you will be prompted by your wallet to perform approval and confirmation.
- Confirm the add collateral transaction using your wallet.
Please be advised that the current transaction fees should be in the range of 0.065 GWEI, where the number of gas units used can vary in a range from 900K to 1.3M. Use the official RKS Gas Station tool to estimate the gas fee adjustment.
Congratulations! You have successfully added collateral to your loan on the Sovryn platform.
¶ Disclaimer
- DISCLAIMER: Nothing on this page should be taken as investment advice. The inclusion of a third-party app or service does not constitute an endorsement of the app or service by Sovryn developers or anyone else in the Sovryn community and is provided for informational purposes only. If you have any problems with the listed third-party apps or services, please contact the maintainer of that app or service for help. Sovryn does not control your funds in any supported Web3 wallet - you are entirely responsible for your wallet security. Please do your own research and ensure you understand and accept the risks before trading or using any apps or services to store your funds.